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BYD: PHEVs in China for Olympics; US in 2009-10; WSJ on Batteries

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  • Felix Kramer
    We re expecting a number of PHEV entrants to show up at the Detroit Auto Show next week. Here s the first, from China. We also include a front-page story by
    Message 1 of 1 , Jan 11, 2008
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      We're expecting a number of PHEV entrants to show up at the Detroit
      Auto Show next week. Here's the first, from China.

      We also include a front-page story by the same Wall Street Journal
      automotive reporter, Norihiko Shoruzu, surveying the battery world.
      The story mentions four top battery contenders, A123, Altair,EnerDel
      and Valence; it provides some basic background on the first two but
      trails off before looking at the latst two.

      China's BYD Auto Plans To Sell Hybrids in U.S.
      By NORIHIKO SHIROUZUJanuary 11, 2008 8:52 a.m.
      http://online.wsj.com/article/SB120005753514983735.html?mod=googlenews_wsj
      Write to Norihiko Shirouzu at norihiko.shirouzu@...

      DETROIT -- BYD Auto Co., a Chinese upstart auto maker with only five
      years of experience in auto manufacturing, wants to start selling
      cars in the U.S. auto market in a couple of years, but it plans to do
      so not just with gasoline-powered vehicles but more environmentally
      friendly electric vehicles, a senior company manager told The Wall
      Street Journal here this week.

      Paul Lin, auto export manager of BYD Auto, admitted the company
      anticipates a rough time in making inroads into the U.S. market.
      While the company already sells cars in China and other developing
      countries, it recognizes meeting stringent U.S. safety and emissions
      regulations would be a big challenge for the upstart. What's more,
      the company has just begun efforts to establish relationships with
      American vehicle distributors.

      "BYD is growing fast, and everybody's talking about Chinese car
      companies' ambitions for the U.S. market. But actually a lot of
      Chinese auto companies still need more time," Mr. Lin said in an
      interview. "It took Toyota 60 years to get where they are today."

      Still, the executive of the Shenzhen-based auto maker -- one of
      several companies consulting firm JD Power and Associates has
      identified as "Chinese auto makers to watch" -- said his company
      wants to launch in the U.S., among other vehicles, a new breed of a
      gasoline-electric hybrid that can be plugged into a home wall outlet
      and run 100 kilometers (about 61 miles) on electricity when fully charged.

      Mr. Lin said the plug-in hybrid, based on its gasoline-fueled BYD F6
      sedan, will likely hit U.S. dealer showrooms until the end of 2009 or
      the beginning of 2010. BYD Auto is expected to display the plug-in
      hybrid at the North American International Auto Show that opens to
      the public on Jan. 19.

      BYD Auto, one of several China-based auto makers displaying cars in
      Detroit this month, is taking to advantage of the Detroit auto show
      to establish contact with U.S. car distributors. As what Mr. Lin
      calls a proof of BYD Auto's commitment, he and his small team of
      executives have rented an apartment in Dearborn, a suburb of Detroit,
      and plan to stay here through the end of January to follow up with any leads.

      "Attending the Detroit show this time is to develop contacts and get
      our name known by potential distributors," Mr. Lin said. "We want
      people in America to know BYD is not a noodle company."

      He said the launch of the plug-in hybrid would be quickly followed by
      other models including other plug-in hybrids, all-electric cars, as
      well as conventional gasoline-fueled vehicles. Mr. Lin didn't
      elaborate on what kind of time frame BYD Auto had in mind.

      Mr. Lin said the plug-in hybrid is almost ready for sale in China,
      but BYD Auto will need at least two more years to make sure it meets
      America's tough safety and other regulations.

      In China, Mr. Lin said BYD Auto plans to launch the plug-in hybrid
      this summer -- "during the Beijing Olympics" -- and is likely to sell
      it for 200,000 yuan [US$27,000]. The company likely has sold about
      100,000 cars in China in 2007, he said.

      The car would likely to sell for a similar retail price tag in the
      U.S., he said.

      The BYD plug-in hybrid, to be called the BYD F6 DM, is similar in
      design to General Motors Corp.'s Chevy Volt concept car which GM is
      aiming to launch by 2010. Both cars are propelled by electric motors
      using electricity stored on batteries and generated by a small
      gasoline engine on the car when the car run out of electricity when
      it isn't plugged in.

      BYD Auto, which began producing and selling cars in 2003, is
      displaying the plug-in hybrid car and four gasoline-fueled vehicles
      at the Detroit auto show.

      The company's interest in electrified vehicles stems from its
      history. The company is a unit of BYD Group that has emerged as a
      major global supplier of lithium-ion batteries and other electronics
      components for cellphones such as those marketed by Finland's Nokia Corp.


      Race to Make Electric Cars Stalled by Battery Problems
      GM, Toyota Seek Ways To Snuff Out Fire Risk; Start-Ups See Opening
      Page 1 Wall Street Journal Jan. 11, 2008 By NORIHIKO SHIROUZU
      http://online.wsj.com/article/SB120001331482082629.html

      DETROIT -- When the car world gathers here Sunday for the annual
      North American International Auto Show, the industry will be buzzing
      about electric power. Auto makers from General Motors Corp. to Toyota
      Motor Corp. will be displaying a new breed of cars that run mainly on
      electricity.

      But there is one thing the car people won't be charged up about:
      batteries. For all the hoopla, nobody yet has figured out how to make
      a small enough battery that will hold a big enough charge for these
      new cars -- and not be a risk to burst into flames.

      The limits of electric-car technology are achingly clear in one of
      the most-heralded cars on the drawing board: GM's Chevy Volt. GM
      executives mention the prototype, which the Detroit auto maker aims
      to put into production in three years, nearly every time they discuss
      their vision for "gas free" cars. But GM still hasn't solved the
      battery problem.

      A handful of companies are racing to come up with a battery suitable
      for this next generation of electric cars. The competition pits big
      Asian battery makers against a gaggle of small start-ups, most of
      them based in the U.S. Each is trying to come up with a viable power
      source for long-range electric cars and for gasoline-electric hybrids
      such as the Volt, which rely far more on electricity than do hybrids
      currently on the market.

      But the most promising technology, lithium-ion batteries like the
      ones used in laptop computers and cellphones, has been plagued by
      problems. Earlier this week, for example, the battery in a laptop
      made by a South Korean firm burst into flames. U.S. transportation
      authorities recently said air travelers will no longer be allowed to
      pack loose lithium-ion batteries in checked luggage.

      Car makers can't very well sell vehicles that might "ignite and burn
      up grandma and two kids sitting on half a ton of batteries in the
      car," says Tim Spitler, a battery-material researcher at Altair
      Nanotechnologies, which is working to develop a car battery.

      Japanese companies have long dominated the lithium-ion battery
      market. But a slew of obscure American companies such as A123
      Systems, EnerDel Inc., Valence Technology and Altair have gotten into
      the game, hoping to leap-frog their Japanese competitors by solving
      the problems.

      Rising oil prices, coupled with public concern over global warming,
      have prompted auto makers to intensify efforts to build cars that run
      on alternative fuels. The hope is that cars running on powerful
      batteries could help reduce the total carbon dioxide pumped out by
      passenger cars, which scientists say is a major contributor to global warming.

      Toyota, GM and other auto makers have been experimenting with several
      different systems for harnessing electric power: a new kind of hybrid
      called plug-ins, which rely on small gasoline engines to occasionally
      boost the batteries, and cars that run entirely on batteries. Both
      systems require cars to be plugged in for recharging.

      The popular Toyota Prius hybrid, which never needs to be plugged in,
      relies partly on gasoline power almost as soon as it picks up speed,
      and averages about 46 miles per gallon. GM says its plug-in Volt will
      be designed to run on batteries alone for up to 40 miles -- the
      length of a typical commute.

      Plug-in hybrids and fully electric cars both require batteries that
      can store lots of energy, recharge quickly and operate in all weather
      without overheating or failing. Right now, no commercially available
      battery technology fits the bill, including the batteries used in the
      Prius, called nickel-metal-hydride cells.

      Lithium-ion technology holds the most promise. Lithium-ion batteries,
      unlike the disposable alkaline variety sold in drugstores, hold lots
      of energy in a small cell, and can be charged again and again.
      Japanese companies such as Sony Corp. and Sanyo Electric Co. took an
      early lead in figuring out how to use the technology to make
      batteries for consumer electronics.

      Then reports began surfacing that laptop and cellphone batteries were
      overheating and catching fire. The batteries tend to short-circuit
      when damaged, or when a part designed to separate positive and
      negative electrodes is scarred during manufacturing, among other
      possibilities. In 2006, Sony decided to undertake a massive recall of
      its batteries used in laptops sold by Dell Inc. Many other battery
      and electronics makers followed suit. Sanyo recalled laptop and
      cellphone batteries. Nokia Corp. offered to replace cellphone
      batteries made by Matsushita Electric Industrial Co.

      Toyota had planned to use lithium-ion batteries in a new version of
      the Prius that would get 60 to 80 miles per gallon, according to
      Toyota engineers. But the safety problems prompted Toyota to push
      back the planned launch of the lithium-ion technology from later this
      year to late 2010 or early 2011.

      The problem presented an opportunity for U.S. battery makers to catch
      up with the Japanese, who previously appeared to have the market
      locked up. Whichever company solved the overheating problem would
      have a shot at lucrative deals with auto makers such as GM. The
      challenge was to figure out how to reduce the danger level of the
      lithium-ion technology by altering the chemical makeup of the battery guts.

      Early last year, GM invited 27 lithium-ion battery producers from
      around the world to provide sample battery cells and performance data
      in order to be considered for the Volt program.

      "We just lined up every known high-tech manufacturer of lithium-ion
      batteries," says GM Vice Chairman Bob Lutz. "We put the pluses and
      the minuses and weighted them by energy content, production capacity,
      reputation, cost, type of chemistry. The guys did the whole matrix
      and assigned points and added up the points...that's how we got down
      to relatively a few suppliers, maybe six or seven out of the whole
      world population."

      GM eventually selected two "development suppliers," consortiums of
      companies whose technologies it will test for the Volt. One
      consortium includes A123 Systems, a start-up led by a group of
      scientists from the Massachusetts Institute of Technology. The other
      group is led by a unit of South Korean chemical maker LG Chem Ltd.

      A123 Systems aims to commercialize battery technology developed by
      MIT professor Yet-Ming Chiang. Mr. Chiang set up the company in 2002
      with Bart Riley, formerly an executive at American Superconductor
      Corp., and entrepreneur Ric Fulop. After starting with a research
      grant from the U.S. Department of Energy, A123 raised $132 million in
      capital from investors including Sequoia Capital, a Menlo Park,
      Calif., venture-capital firm, and General Electric Co.'s
      commercial-finance unit. It hopes to go public as early as this year.

      A123 has been working with iron-phosphate technology in an effort to
      create a lithium-ion battery that's less likely to overheat. It
      already supplies lithium-ion batteries to Black & Decker Corp. for
      use in power tools. But winning the Volt deal would boost its
      business substantially.

      David Vieau, the company's chief executive, sees a limited window of
      opportunity. "When the market is in such a big disruption as it is
      now, that's the only time a company like ours has a chance to cut
      into the business," he says. "There's really no existing supplier"
      that can meet technological demands for a car like the Volt. "They
      can't get it from Sanyo or Panasonic. They have to shop around, so
      that opens up the door for an opportunity for someone like us. It's a
      very unusual time. It's only going to last for a certain period of
      time, probably five years."

      The big Asian battery makers have enormous advantages, starting with
      the big investments they've already made in the manufacturing
      process. Mitsuru Homma, Sanyo's top battery executive, contends that
      no matter how good a company is at laboratory research, it needs to
      be good at manufacturing to produce a safe battery.

      "It doesn't matter how far ahead you are in research and development"
      because all lithium-ion batteries are prone to overheating, no matter
      what chemistries you use, he contends. "Clever design can minimize
      the chances for overheating. But if you don't have fool-proof
      manufacturing know-how, you won't be able to guarantee 100% the
      safety of a battery cell, no matter how safe it may be proven in the lab."

      Altair Nanotechnologies, based in a warehouselike building near the
      airport in Reno, Nev., is typical of the small companies chasing the
      opportunity. It claims to have improved on lithium-ion battery
      technology. Its challenge is to convince potential customers that its
      technology is the answer and that the company is capable of
      large-scale production.

      Chief Executive Officer Alan Gotcher says that Altair, which has been
      listed on the Nasdaq Stock Market since 1997, has a "checkered past."
      For years, he says, it operated as a "speculative company" that,
      among other things, explored for oil and gas. Since 2004, he says, it
      has focused on manufacturing high-tech materials for batteries,
      pharmaceuticals, paint pigments and industrial chemicals. In the
      first three quarters of 2007, it had a loss of $16.7 million. During
      an employee meeting last fall, Mr. Gotcher stressed that all
      employees need to contribute to slowing the company's cash burn to
      "make sure the company will stay around."

      Mr. Spitler, a 60-year-old engineer, is at the center of Altair's
      battery efforts. A two-time college dropout who got his degree in
      chemistry at age 29, he worked for years for Dupont Co., then for a
      company that was sold in 1998 to Altair. At that company, he
      researched ways to improve the quality of paint.

      It turned out that his research on paint pigments was applicable to
      the battery problem. His paint work and related experiments involved
      shrinking particles of a material called lithium titanate. That
      material, he contends, is useful in lithium-ion batteries. Other
      scientists, he says, had recognized that lithium titanate could make
      lithium-ion batteries more stable chemically, and thus less likely to
      overheat and ignite. But using the material, those scientists
      concluded, limited both the battery's power and its energy density --
      its ability to store energy in a given volume of space.

      Mr. Spitler contends that if the particles are shrunken small enough
      -- to 40 millionths of a millimeter in diameter -- they'll work. At
      Altair, he says, he came up with a cheap way to do that. The
      equipment Altair uses to produce the particles and how it "mills" and
      "bakes" them, Mr. Spitler says, "we never reveal it to anybody."

      When Mr. Gotcher, a 57-year-old chemist, arrived at Altair in 2004 to
      take over as chief executive, he found Mr. Spitler's technology
      sitting on a shelf. He decided to steer Altair into the business of
      making lithium-ion batteries. He raised capital through a stock
      offering and brought in a dozen battery experts to help create
      proprietary batteries and battery modules.

      Altair's engineers say their batteries are fast-charging and
      powerful, work at temperatures ranging from 167 degrees Fahrenheit to
      58 degrees below zero, and are less likely to catch fire or explode.

      Altair began selling them in 2006, but sales have been slow. The
      company's executives say they are optimistic about getting orders
      from a few electric-vehicle start-ups, such as Phoenix Motorcars Inc.
      of Ontario, Calif., and Lightning Car Co. of the United Kingdom. But
      in November, Altair disclosed that Phoenix would likely not make $16
      million to $42 million in orders this year, which Altair had
      projected. "Orders may fall below $16 million," Altair said in a
      Securities and Exchange Commission filing.

      One big problem is that Altair's batteries have a lower energy
      density than competing designs. As a result, a hybrid or electric car
      would need about twice the volume of Altair batteries as it would
      batteries that that pack a bigger punch, such as the ones from A123
      Systems. That makes Altair's products less suitable for small hybrids
      like the Volt than for larger vehicles like SUVs and pickup trucks.

      Mr. Gotcher remains hopeful. In November, Altair raised $40 million
      through a stock sale to a Dubai trading company, and a Japanese
      trading company is considering investing, people familiar with the matter say.

      Last month, Japan's Toshiba Corp. announced it had developed a new
      lithium-ion battery that offers "excellent safety" and would last
      through 10 years of "constant, rapid charging." It uses technology
      similar to Altair's.

      -- -- -- -- -- -- -- -- -- -- -- --
      Felix Kramer fkramer@...
      Founder California Cars Initiative
      http://www.calcars.org
      http://www.calcars.org/news-archive.html
      -- -- -- -- -- -- -- -- -- -- -- --
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